SIPP-linked adviser connected to £7.4m compensation bill

The FSCS declared five regulated firms in default in February and March, well down on the 12 firms in default in the same period last year, however one of the firms facing the biggest compensation bills - Alexander David Securities Ltd - was linked to SIPPs. While the number of firms in default was down, the size of compensation bills continues to be substantial, the FSCS said. One of the biggest compensation bills so far this year is for London Community Credit Union Limited (FRN 213743). The FSCS estimates the compensation scheme for this provider could top £15m. The second most costly compensation bill over the last financial year was for Alexander David Securities Limited (FRN 469150) which was declared in default in April 2024. In May last year the City of London-based advisory firm had 463 claims against it, with 51 rejected and 411 in progress, for investment and pension advice. The investment firm was linked to a SIPP adviser and other firms. The FSCS says the compensation bill for the firm has so far reached £7.4m (see below). In 2022 Alexander David Securities Limited (ADSL) entered creditors’ voluntary liquidation last week with BDO LLP appointed liquidators. Many of the complaints relate to allegations that one of ADSL’s approved representatives provided “unsuitable investment advice” to customers to move funds in their SIPP into debentures issued by a company with shares quoted on the Cyprus and Vienna Stock Exchanges. The FSCS has now categorised the firm as failed and is also investigating. It says the firm was involved in pensions and investments. A declaration of default by the FSCS opens the doors to clients of the failed firms to seek to claim compensation from the FSCS of up to £85,000 per case. The FSCS is the industry-funded safety net scheme for consumers when regulated firms fail. The body said the latest crop of firms had gone out of business and were unable to meet claims themselves. There is no explanation as to why the number of failed firms was down in February and March this year but it may be an anomaly as five regulated firms have already been declared as failed so far in April, including several financial advisory firms. Defaults declared by FSCS from 1 February to 31 March 2025 (5 firms) were: Firm Address Date declared in default Foreign Currency Innovations Ltd, trading as FCI, FCI Markets, FCI Capital Management, formerly Earnex (FRN 616985) Suite 1C, Union House, 117 High Street, Billericay, CM12 9AH 06/02/2025 Reis Financial Planning Ltd (FRN 673257) 26 Crosland Edge, Meltham, Holmfirth, HD9 5RS 20/02/2025 Basildon Credit Union Limited (FRN 213229) The Basildon Centre, St Martins Square, Basildon, SS14 1DL 17/03/2025 TenetConnect Ltd formerly Interdependence Ltd, trading as Tenet Network Services (FRN 149826) 5 Lister Hill, Horsforth, Leeds, LS18 5AZ 25/03/2025 LLP Services Ltd (FRN 229382) 36 St Georges’ Wharf, 6 Shad Thames, London, SE1 2YS 28/03/2025 In the last financial year (from 01/04/2024 to 31/03/2025) the FSCS has declared 45 firms in default. Of these firms, the top five in terms of compensation paid out (at the end of March) are: Firm Date declared in default Compensation paid at 31/03/2025 London Community Credit Union Limited (FRN 213743) 22/01/2025 £13.3m* Alexander David Securities Limited (FRN 469150) 30/04/2024 £7.4m Castle & Crystal Credit Union Limited (FRN 213711) 21/05/2024 £2.4m Haich & Associates (UK) Limited (FRN 791582) 11/06/2024 £1.1m Foreign Currency Innovations Ltd (FRN 616985) 06/02/2025 £300,000-£400,000

SIPP-linked adviser connected to £7.4m compensation bill

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